Finally, in Williams v. Superior Court (Allstate Ins. Co.), the California Court of Appeal for the Second District reversed the lower court’s decertification of a class of automotive field adjusters who claimed they were not paid for certain pre- and post-shift activities, such as logging onto their computers, setting voicemail messages, and checking for schedule and travel changes. The trial court initially certified the class, finding that Allstate’s alleged requirement that the employees perform these pre- and post-shift tasks was a common question justifying class certification. Shortly after the class was certified, however, the United States Supreme Court handed down its decision in Wal-Mart Stores, Inc. v. Dukes. Based on that decision, Allstate moved to decertify the class, arguing that individualized issues predominated as to whether any employee spent more than a de minimis amount of time on pre- or post-shift tasks. Specifically, Allstate argued that since Dukes rejected a “trial by formula” approach to class actions, a series of mini-trials would be necessary to establish any individual employee’s right to compensation for time spent on the allegedly required pre- or post-shift tasks.

Although the trial court agreed with Allstate and decertified the class, the Court of Appeal reversed the decertification order with directions to certify. The Court found that “[t]rial by formula is [merely] a method of calculating damages,” which “have little, if any, relevance at the certification stage.” Accordingly, it held that “whether Allstate had a practice of not paying adjusters for off-the-clock time was common enough to justify class certification, regardless of whether Allstate’s de minimis defense could, arguably, eviscerate any one employee’s right to recover any wages at all.”

These decisions do clearly leave employers exposed to a greater risk of a class being certified, which typically works in favor of plaintiffs’ leveraging multi-million dollar settlements. All is not lost, however. Since the appellate courts still have yet to address precisely how these (admittedly difficult to prove) cases should be tried, class wide liability may not be a foregone conclusion.

For example, should the trial court determine that Joe’s Crab Shack required its managers to perform certain nonexempt tasks (thereby resolving the arguably common question), plaintiffs presumably will still have to prove – as a matter of liability – that every single class member did not perform exempt tasks more than 50 percent of the time. Since the court must address this question eventually, employers may have an opportunity to win the war prior to trial – even after losing the initial class certification battle.

Should evidence be developed that numerous class members did not perform nonexempt tasks, for instance, an employer may later move to decertify the class or may ask the court to require that each and every class member attend trial in order to prove his or her actual damages. Another option may be to move in limine to preclude statistical or “representative” evidence of time spent on nonexempt tasks where, after certification, there is evidence of a wide variance among class members regarding how much time each spent on these tasks. Given the opportunities to deflate a certified class later in the litigation and the prospect of thousands of mini-trials, employers may be down after these recent decisions, but they certainly are not out. In short, a class action may be certified – though not suitable — for trial.

It has been an eventful couple of weeks in the development of California class action jurisprudence. Jones v. Farmers was published on November 26, 2013; Hendleman v. Los Altos Apartments was depublished on the same day; and Martinez v. Joe's Crab Shack was published on December 4, 2013.

Then, last Friday, came Williams v. Superior Court (Allstate Ins. Co.), ___ Cal.App.4th ___ (Dec. 6, 2013). In Williams, the Court of Appeal (Second Appellate District, Division Eight) reversed an order granting the defendant's motion for decertification, which the trial court had issued in the wake of Dukes.

The case asserted overtime claims on behalf of non-exempt field insurance adjusters who were not compensated for time worked at the beginning and the end of the day. Instead of tracking and paying for this time, Allstate's uniform policy was to assume that the adjusters did not begin working until the start time of the day's first field appointment. Slip op. at 2-4.

Initially, in June 2010, the trial court granted class certification. In June 2011, the U.S. Supreme Court handed down Dukes. In July 2012, the trial court granted Allstate's motion to decertify the class. Slip op. at 5-6. The order reasoned that Dukes "has changed the law," and that "[a]fter Dukes, Allstate is entitled to litigate its defenses to each individual class member," including the defense that certain adjusters never worked unpaid overtime despite Allstate's uniform policy, as well as the defense that overtime worked by certain adjusters was de minimis. Id. at 5 (quoting order at 1, 2).

The plaintiff filed a writ petition, which the Court of Appeal summarily denied in October 2012. Undiscouraged, he filed a review petition with the California Supreme Court, and in December 2012, that court issued a "grant and transfer" order, directing the Court of Appeal to consider the writ petition on the merits. Williams v. Superior Court (Allstate Ins. Co.), No. S206441.

As an initial matter, the Court of Appeal opinion summarizes the standards governing motions for decertification of a certified class, stressing the defendant's burden to show "a significant change in circumstances":

Decertification requires new law or newly discovered evidence showing changed circumstances. (Weinstat v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1225.) A motion for decertification is not an opportunity for a disgruntled class defendant to seek a do-over of its previously unsuccessful opposition to certification. “Modifications of an original class ruling, including decertifications, typically occur in response to a significant change in circumstances, and ‘[i]n the absence of materially changed or clarified circumstances . . . courts should not condone a series of rearguments on the class issues.’ [Citation.].” (Driver v. AppleIllinois, LLC (N.D. Ill., Mar. 2, 2012, No. 06 C 6149) 2012 WL 689169, *1 (Driver).) “A class should be decertified ‘only where it is clear there exist changed circumstances making continued class action treatment improper.’ ” (Green v. Obledo (1981) 29 Cal.3d 126, 147.)

Slip op. at 7 (emphasis added).

Because the trial court relied wholly on Dukes in decertifying the class, the opinion discusses Dukes at length. It is the first California appellate-level court to correctly acknowledge that the infamous "trial by formula" language of Dukes appeared in a section of Dukes addressing, first of all, Rule 23(b)(2) class actions (not (b)(3) cases), and, secondly, the unique statutory procedures of Title VII cases. On the latter point, the opinion explains:

The Supreme Court’s second area of focus in Part III of Dukes involved the statutory affirmative defenses in the anti-discrimination statute Title VII. Because the affirmative defenses were statutory, Dukes concluded a class proceeding could not deprive Wal-Mart of its right to present those defenses. (Dukes, supra, 131 S.Ct. at pp. 2560-2561.) As those affirmative defenses required individualized evidence, Dukes disapproved a “Trial by Formula” of Wal-Mart’s affirmative defenses because it prevented Wal-Mart from offering its individualized evidence. (Id. at p. 2561.)

The panel then explained that the claim for unpaid overtime was properly certified for class treatment under the framework of Dukes itself, and that the claim should not have been decertified:

At the certification stage, the concern is whether class members have raised a justiciable question applicable to all class members. Although Allstate may have presented evidence that its official policies are lawful, “this showing does not end the inquiry.” (Jimenez, supra, 2012 WL 1366052, *8.) Here, the question is whether Allstate had a practice of not paying adjusters for off-the-clock time. (Ibid.) The answer to that question will apply to the entire class of adjusters. If the answer to that question is “yes” – which is the answer the trial court initially assumed when it first certified the Off-the-Clock class, and is the answer we must presume in reviewing decertification (Brinker, supra, 53 Cal.4th at p. 1023) – then, in Duke’s [sic] phrase, that answer is the “glue” that binds all the class members. (Dukes, supra, 131 S.Ct. at p. 2552 [a class requires the “glue” of a single answer for a question applicable to all class members].)

Slip op. at 12 (emphasis added).

The panel then turned to, and rejected, Allstate's argument that certification should be denied because Allstate could show that some adjusters may not have worked any unpaid overtime:

An unlawful practice may create commonality even if the practice affects class members differently. “[C]lass treatment does not require that all class members have been equally affected by the challenged practices—it suffices that the issue of whether the practice itself was unlawful is common to all.” (Jacks v. DirectSat USA, LLC (N.D. Ill. 2012) 2012 WL 2374444, *6 ....) It may be true that some adjusters never worked off the clock, and such adjusters were thus not injured by Allstate’s practice of adjusters working off the clock. But the existence of individuality as to damages does not defeat class certification. (Jimenez, supra, 2012 WL 1366052, *19 [“[O]vertime claims may present a number of individualized questions, including whether individual employees worked off-the-clock. [Citation.] Nonetheless, courts have certified classes and allowed collective actions to proceed notwithstanding such circumstances. . . . [¶] Here, Plaintiffs allege a company-wide policy of discouraging and limiting overtime.”]; Espinoza v. 953 Assocs. LLC, supra, 280 F.R.D. at p. 130 [“Plaintiffs allege that Defendants failed to pay minimum wages and overtime compensation as a result of certain policies and practices. Although plaintiffs’ claims may raise individualized questions regarding the number of hours worked and how much each employee was entitled to be paid, those differences go to the damages that each employee is owed, not to the common question of Defendants’ liability.”].)

Slip op. at 18-19 (emphasis added).

Achieving this result required some top-flight legal work by plaintiff's counsel. Sparking the interest of the California Supreme Court after the Court of Appeal summarily denied their writ petition was an especially impressive accomplishment. Congratulations to Kevin Barnes, Gregg Lander and Jim Trush. A copy of their successful petition for review can be downloaded at this link: http://www.17200blog.com/briefs/Allstat ... -05-12.pdf

In Williams v. Superior Court (Allstate Insurance Company) – filed December 6, 2013, Second District, Div. Eight, the Second Appellate District granted a petition for writ of mandate, vacated a trial court class decertification order, and remanded. The court held that the trial court erred in concluding that a proposed class of some 200 insurance adjusters was not certifiable because only some, but not all, of those class members might have suffered damages due to a company policy precluding compensation for certain tasks.

In action for failure to pay overtime wages, the trial court abused its discretion by decertifying the plaintiff class based on the precedent in Wal-Mart Stores, Inc. v. Dukes (2011) 131 S.Ct. 2541, holding that a plaintiff class could not be certified in a gender discrimination action, because proof of discriminatory intent would be required as to each individual store manager. However, Dukes did not establish an absence of commonality as to a plaintiffs’ claim that the employer required class members to work “off the clock” at the beginning and end of each work day. Because an employer who knew, or should have known, of overtime work may be liable for overtime wages as a matter of state law, a pattern or practice of employees working off-the-clock in order to complete their daily work can sustain a common question of fact or law that supports commonality for class certification.

All-State Auto field adjusters, employees who travel to sites such as body shops to inspect and analyze the value of damaged vehicles, receive their daily work schedules of vehicle inspection appointments by logging onto Allstate’s “Work Force Management System” software loaded onto their work laptops. Although the adjusters are hourly employees entitled to overtime if they work more than 8 hours a day or 40 hours a week, the Work Force Management System software is not a time record keeping program, nor does Allstate maintain any other time clock system.

Rather than track the actual hours an adjuster works, the Work Force Management System instead presumes each adjuster’s eight-hour workday begins when the adjuster arrives at his first vehicle-inspection appointment of the day. As the Allstate executive explained, “Their day begins at the first stop.”

Allstate’s presumption that an adjuster’s workday begins with the first appointment as set by the Work Force Management System does not take into account any work the adjuster may have performed before the day’s first appointment.

__________________________ Appellant Christopher Williams petitions for a writ of mandate directing the trial court to vacate its order decertifying appellant’s class action claim that alleged Allstate Insurance Company failed to pay overtime wages to Allstate’s auto field adjusters. A writ shall issue forthwith directing the trial court to vacate its decertification order and to recertify the class.

FACTS AND PROCEEDINGS

Allstate Insurance Company employs several hundred auto field adjusters in California. Auto field adjusters travel to sites such as body shops to inspect, and analyze the value of, damaged vehicles. In 2005, Allstate changed the classification of its auto field adjusters from salaried employees to hourly employees in response to litigation challenging their misclassification as employees exempt from the protection of overtime wage laws. (Jimenez v. Allstate Ins. Co. (C.D. Cal. Apr. 18, 2012, No. LA CV 10-08486) 2012 WL 1366052,*4 (Jimenez).) Auto field adjusters receive their daily work schedules of vehicle inspection appointments by logging onto Allstate’s “Work Force Management System” software loaded onto their work laptops. Although the adjusters are hourly employees entitled to overtime if they work more than 8 hours a day or 40 hours a week, the Work Force Management System software is not a time record keeping program, nor does Allstate maintain any other time clock system. An Allstate executive testified in deposition: “Q. Is there any timekeeping system such as a time clock or a computer punch-in and punch-out system that auto adjusters punch in and punch out in order to keep track of the start and the end of their day? [¶] A. No timekeeping punch-in, punch out system, no. [¶] Q. Is there any timekeeping system of any type, whether it’s a time clock, a computer system or a manual system, that records the actual start time and the actual end time of the auto adjuster’s workday? . . . [¶] A. No.” Rather than track the actual hours an adjuster works, the Work Force Management System instead presumes each adjuster’s eight-hour workday begins when the adjuster arrives at his first vehicle-inspection appointment of the day. As the Allstate executive explained, “Their day begins at the first stop.” Allstate’s presumption that an adjuster’s workday begins with the first appointment as set by the Work Force Management System does not take into account any work the adjuster may have performed before the day’s first appointment. As the Allstate executive explained in deposition, “Q. The eight-hour workday upon which the system is based assumes that the eight-hour workday begins at the first appointment, correct? [¶] A. Yes. . . . [¶] Q. [T]he eight-hour workday upon which the system is based does not take into account any work that may have been done before the first appointment; isn’t that right? . . . [¶] A. That’s correct. The system doesn’t take into account anything that somebody might have done prior to that first assignment.” Belying Allstate’s assumption of an 8-hour workday, appellant submitted declarations from numerous adjusters stating they typically worked more than 8 hours a day and 40 hours a week after Allstate reclassified them from salaried to hourly employees. Among the overtime tasks those adjusters declared they performed outside their eight-hour shifts were (1) logging onto their work computers, (2) downloading their assignments, (3) making courtesy calls to auto repair shops and car owners to confirm appointments, (4) checking their voice mail, and (5) traveling to and from their first and last appointments of the day. For an adjuster to work overtime, Allstate’s official company policy required the adjuster to get his supervisor’s prior approval. But the adjusters’ declarations stated the adjusters hesitated to request overtime because they did not want to be perceived as “bad” employees. In 2007, appellant Christopher Williams filed a class action complaint for himself and all others similarly situated. The complaint sought class certification for all Allstate auto field adjusters working in California, a group of several hundred employees defined as “all auto adjusters in California that perform field inspections using the Workforce Management System (‘WFMS’) with the title Claim Adjuster, Senior Claim Adjuster, Staff Claim Adjuster, Claim Service Adjuster, Senior Claim Service Adjuster, Staff Claim Service Adjuster, Appraiser, Claim Representative, Claim Specialist and Claim Consultant.” The complaint alleged Allstate had a policy and practice of not compensating adjusters for work performed before they arrived at their first vehicle inspection of the day and for work performed after completing the last inspection of the day. The complaint alleged various wage violation causes of action. Appellant moved for class certification. At the December 2010 class certification hearing, the trial court found evidence in the record “supports a class of Auto Field Adjusters with respect to off-the-clock claims . . . that are performed pre-first inspection and post-last inspection in connection with logging on and off the computer timekeeping system, including, but not limited to, setting voicemail messages and checking for schedule and travel changes.” The court therefore certified an “Off the Clock” class, defined as Allstate’s “California-based hourly-paid Auto Field Adjusters from January 1, 2005 to the present, to the extent that [Allstate] failed to pay for off-the-clock work for the following specific tasks performed prior to the first inspection of the day: logging on and off computer systems, preparing and checking voicemail messages, checking for schedule and travel changes, obtaining directions to the first inspection if there is a travel change, and making courtesy calls.”

United States: A Review Of Key Cases And New Laws Affecting EmployersLast Updated: January 30 2014Article by Lori A. Zahalka and Noah B. SteinsapirMayer Brown

The Trend Continues: Another Reversal of a California Trial Court's Certification Denial in a Wage and Hour Class Action

Decision: In Williams v. Superior Court of Los Angeles (Allstate Insurance Company), a non-exempt automobile field adjuster sought to represent a class of employees in California state court for damages based on an alleged company-wide policy of "off the clock" work. Plaintiffs claimed that the adjusters were required to perform work before the start of their first field appointment and after their last field appointment but were directed not to record such work. Allstate did not pay the employees for any work that was not recorded. The tasks that field adjusters claimed they were required to perform without recording their time included logging onto their work computers, downloading their assignments, making courtesy calls to auto repair shops and car owners to confirm appointments, checking their voice mail and traveling to and from their first and last appointments of the day.

At first, the trial court certified an "off-the-clock" class of non-exempt Allstate field adjusters, but later accepted Allstate's argument that the class should be decertified under the principles set forth by the Supreme Court in Wal-Mart Stores v. Dukes, 131 S.Ct. 2541 (2011). The Court of Appeals permitted an interlocutory appeal and found that the trial court had abused its discretion in decertifying the claim. The Court of Appeals criticized the lower court for relying on a portion of Dukes dealing with injunctive relief, when the Allstate plaintiffs were seeking monetary damages, and for concluding that the Allstate case did not pose a common question.

According to the Court of Appeals, the plaintiffs' claim that Allstate maintained a policy of requiring "off the clock" work was in itself a common question that made class treatment more efficient. In addition, the Court of Appeals declared, without really explaining, that the factual issues in Allstate were different from Dukes because Dukes depended on the proof of the subjective intent of thousands of individual supervisors. Finally, the Court of Appeals rejected the argument that the case would require "trial by formula" as in Dukes, stating that this has little if any impact on the certification decision in the wage and hour context. The Court of Appeals directed the trial court to certify the claim.

Impact: This case is the latest in a string of recent California Court of Appeal decisions to reverse a trial court's denial of class certification. Courts and plaintiffs are finding ways to distinguish Dukes, and the California Court of Appeals seems to be particularly skeptical of applying Dukes to deny certification of wage and hour classes. The decision reinforces that the focus for practitioners seeking a denial of class certification decision should be to persuade the court that there is no common policy at issue. To limit the risk of wage and hour class action claims, California employers should continue to prioritize properly tracking all of their employees' time and providing breaks and overtime pay in accordance with California law.